Transat A.T. (TRZ) Q1 2025 earnings summary

Executive summary

• Revenue for Q1 2025 grew 5.6% year-over-year to CAD 830 million, with adjusted EBITDA reaching CAD 20 million, driven by higher traffic, a 1.7% yield improvement, and lower fuel costs.

• Customer traffic increased 1% and available seat miles rose 0.5% compared to Q1 2024, reflecting continued demand and disciplined capacity planning.

• Net loss was CAD 123 million (CAD 3.10/share), with adjusted net loss at CAD 75 million, nearly flat year-over-year, but reported net loss widened from the prior year.

• Free cash flow surged to CAD 129 million from CAD 39 million in Q1 2024, and cash position stood at CAD 389 million at quarter-end.

• The Elevation program delivered CAD 37 million in annualized adjusted EBITDA run-rate, targeting CAD 100 million by mid-2026.

Financial highlights

• Adjusted EBITDA improved to CAD 20 million (2.4% margin) from negative CAD 3 million in Q1 2024, reflecting revenue growth, a 15% drop in fuel prices, and lower aircraft rent.

• Net loss was CAD 123 million; adjusted net loss was CAD 75 million, nearly flat year-over-year.

• Cash flow from operations rose to CAD 169 million from CAD 111 million, and free cash flow reached CAD 129 million, up from CAD 39 million in Q1 2024.

• Cash and equivalents stood at CAD 389 million at quarter-end; customer deposits reached CAD 1,034 million.

• Net long-term debt and deferred government grant decreased to CAD 424 million from CAD 543 million at Q4 2024 end; net debt reduced to CAD 1,912 million.

Outlook and guidance

• Fiscal 2025 capacity projected to increase by 2% in available seat-miles, with no new aircraft deliveries planned.

• Yield improvement continues into Q2, offsetting a slight decline in load factor; Q2 load factor expected 2 percentage points lower year-over-year, but yields 2% higher.

• Elevation program benefits expected to materialize more significantly in the second half of fiscal 2025, with further revenue management and productivity initiatives planned.

• The company remains cautious for the rest of 2025 due to macroeconomic uncertainties, including U.S. tariffs, Canadian dollar depreciation, and consumer spending risks.

• Persistent Pratt & Whitney GTF engine issues may require capacity adjustments.